What happened

Shares of Overstock (NASDAQ:OSTK) continued their upward march on Monday, after a report showed online furniture sales surged in April. Overstock's stock traded as much as 12% higher on the news, and still traded 9% higher as of 3:30 p.m. EDT.

Overstock has attracted the attention of traders hoping for a quick rebound in the price per share. The stock has quintupled since falling below $3 per share in mid-March.

A small shopping cart with packages sits on a laptop.

Image source: Getty Images.

So what

Privately-held Blueport Commerce allows traditional furniture retailers to build an online presence. The company announced that online furniture sales on its platform grew 306% in April compared to April of 2019. For perspective, those sales are so strong that they even exceed sales from November 2019, which contained Black Friday, by 81%. 

Home goods make up a large part of Overstock's business -- 87% in the first quarter of 2020. Overstock's management echoed Blueport's observations about increased home goods sales, and also noted that new customer growth in April alone increased nearly 250% versus a year ago.

In the span of about four weeks in February and March, Overstock's stock lost more than 70% of its value. But considering e-commerce is growing and home furnishing sales are surging, short-term traders are betting on a quick Overstock rebound. And so far they've been very right.

Now what

To be sure, changes in consumer behavior caused by the COVID-19 pandemic is an opportunity for Overstock. Regarding its business, CEO Jonathan E. Johnson III said on the first-quarter earnings call, "[w]e don't expect it to regress to pre-pandemic levels." That would be good news for Overstock shareholders, especially considering full-year revenue fell 20% in 2019.

While shareholders are celebrating strong sales during the coronavirus, long-term investors can't forget about profits. Overstock hasn't reported a full-year profit by generally accepted accounting principles (GAAP) since 2016, partly explaining why this stock was steadily falling before COVID-19. For those looking for top retail stocks, there may be better options than Overstock.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.